Small businesses often struggle in their beginning phases. To get off the ground, they must sometimes look to third parties for extra funding. One of the ways a small business can obtain supplementary financing during its start-up phase is to apply for a loan from the United States Small Business Administration.
The SBA does not lend money from its own funds. Instead, the money you receive through an SBA loan comes from a local lender who has received a guarantee from the SBA promising that it will pay your balance if you default on the loan. The guarantee from the SBA reduces the financial risk for the lender, thus making him more willing to provide you with a loan at an affordable interest rate.
The SBA offers guaranteed loans under several different programs. The most popular SBA program is the 7(a) loan program, which may provide small business owners with a loan of up to $750,000. Businesses usually use these loans for asset purchases or working capital. Though the SBA prefers to lend to businesses with several years of income statements under this program, 7(a) loans are sometimes available to start-up businesses as well.
If you are not able to qualify for the 7(a) loan program, you can apply for the SBA’s microloan program. The microloan program operates similarly to the 7(a) program, but the loan your business will receive under this program is smaller. The maximum loan amount for the SBA’s microloan program is $35,000. However, the qualification requirements for the microloan program are less restrictive, so small business start-ups may have an easier time obtaining this loan.
If you are currently starting a new business, you may want to look into SBA loans a little further. To see how much money your business may qualify to borrow under an SBA loan, consider completing the simple application provided by UnsecuredBizLoan. After you submit the application, a representative will contact you to give you more information.
To apply for funding for your small business, use the form on the right to begin the application process.